Project Tiger: Bulk & Speciality Chemicals Trading Business
Opportunity Overview
Based in Australia, Tiger is a trader of bulk and specialty chemicals to Australasia and Latin America
- Sales: $US 1,100m; EBITDA: $US 113m; EBITDA margin 10%, consistent track record of profitability
- End-Users include mining, industrial, food, pulp & paper, water, food & beverage, health and personal care
- trading platform delivers predictable revenue & earnings via a fully integrated supply chain
- export products include water treatment, food & beverage, health and personal care to Asia Pacific
Investment Thesis
Despite consistent profitability we believe Tiger has underperformed. A new management team has identified a series of value creation opportunities that will cut costs and deliver margin & volume improvements including
- transform to a low cost standalone private business with improved focus on inventory management, cost reduction & cash conversion
- realign management structure to drive vertical efficiencies and reduce fixed costs
- revitalize sales philosophy and sales incentive structure to lift margin and volume gains, create further opportunities to invest in Asia
Consistent revenue and earnings result from its trading platform ie: earnings dependent on the ability of the sales teams to maintain margin irrespective of the sales volume and price
- Tiger earnings are reliant on the ability of its traders ability to maintain supplier and Principal relationships to source chemicals cost effectively, then distribute them at a consistent positive margin
- chemicals are required for general economic activity; Tiger is well placed to service growing demand
Scale, diversification & privileged market position is supported by underlying demand fundamentals and identifiable barriers to entry. Attractive attributes that support the privatisation of a growth business
- #1 chemicals business in Australia with exposure to large portion of Australian economy which is expected to grow 3%‐4% annually
- Tiger supplies more than 15,000 products to over 40 end markets which mitigates cyclical exposure to any one sector of the economy
- privileged supply chain assets, Principal sourcing relationships, scale and strength of distribution channel not easily replicated
Divest non core Tiger business units, reduce the effective purchase price and lower the investment risks
Transaction Dynamics
Opportunity to access an international trading business to secure its supply chain, increase scale and deliver efficiencies.
Process
Management Advisors is looking to indentify a suitable investor to support a revitalised management team and we will assist in the transaction process through to completion.